Re: Why is KYC mandatory in CEX?

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

If business didn't have regulations, they would definitely not ask you for KYC documents, wouldn't really care about the source of your money or probably would seize your account anytime. You use cryptocurrency for your privacy but once you make yourself in touch with centralized system, you are vanishing that privacy. Centralized systems 99% times don't care about your privacy because that's your problem, not theirs and to be honest, majority of people don't care about privacy too much if the service they get fulfills their needs.

Not all cex exchanges that do ask for KYC and these is mostly need to regulated exchanges to help curb money laundry and other illegal practice by scammers and hackers. The KYC helps to know who is who and reduce the art of scam attempt by individual customers. Many people that have been in the market for long now don't like a cex exchange that ask for KYC because they know what it means and the effect of giving there credentials to exchange and the data is misused or get to the hands of hackers. People still prefer to use p2p to sell there tokens that going to give there information to illegal exchanges.

Both CEX and DEX have pros and cons. While KYC helps CEX control and manage illegal activities, but KYC will also reveal user information and many people do not like this. Meanwhile, DEX does not require KYC and that is also a loophole that criminals will take advantage of to commit illegal acts. So it is difficult to say whether CEX is better or DEX is better. DEX users will criticize CEX and vice versa, just like cryptocurrency investors always criticize other investments like real estate or stocks. In my opinion, depending on each person's taste, there is a suitable choice, I will not say which one is better than the other.